Tanker Glut!
Back in September, we discussed the Ghost Fleet of the Recession.
Here’s the latest (via Bloomberg) on the tanker glut:
“A 26-mile-long line of idled oil tankers, enough to blockade the English Channel, may signal a 25 percent slump in freight rates next year.
Traders booked a record number of ships for storage this year, seeking to profit from longer-dated energy futures trading at a premium to contracts for immediate delivery, according to SSY Consultancy & Research Ltd., a unit of the world’s second- largest shipbroker. Ships taken out of that trade would return to compete for cargoes just as deliveries from shipyards’ largest-ever order book swell the global fleet.”
If you view the recovery as mediocre, stimulus-driven, hampered by a credit-constrained consumer, than tgius is what you would expect.
The trade in oil that would surprise most people isn’t a rise to $100 from $75, its a drop to $50 . . .
Source:
Tanker Glut Signals 25% Drop as 26-Mile Queue Overwhelms Demand
Alaric Nightingale and Alex Kwiatkowski
Bloomberg, December 28, 2009
http://www.businessweek.com/news/2009-12-28/tanker-glut-signals-25-drop-as-26-mile-queue-overwhelms-demand.html
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December 28th, 2009 at 5:01 pm
“The trade in oil that would surprise most people isn’t a rise to $100 from $75, its a drop to $50”
A quick drop down to $50 (followed by a rebound) wouldn’t surprise me. But if the 50 day M.A. of $WTIC got down to $50 during the course of 2010, that would surprise me.
December 28th, 2009 at 7:41 pm
As long as GS, BP, et al are allowed to hold unlimited contracts and round trip trade among themselves via the ICE/NYMEX, then oil pricing has no basis in reality (except at the pump) and it makes no difference if we have a 100 year storage high. The price will be whatever the “owners” need it to be. God help us if China or India decide to import 100k more. The MSM will be pressed into service to convince the public that next week it will be gone and the sky is the limit for price. Happy New Year.
December 28th, 2009 at 8:03 pm
“But if the 50 day M.A. of $WTIC got down to $50 during the course of 2010, that would surprise me”
Prepare to be surprised! Stimutacs will wear off sooner or later.
December 28th, 2009 at 9:53 pm
ddrich Says: December 28th, 2009 at 7:41 pm
as can be heard, on the Back-40: “of, F******, course, that is what is up..”
funny, in a sense, when 43 was in, it was all-”Oil Price manipulation/”gouging”"-all the time..
now, w/44, not so much..
That’s “Change”, We can believe in!~ “Si! Se puede~”
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December 29th, 2009 at 12:05 am
Once all the bankters dump the crude they have in storage then a drop to $50.00 would not be surprising.
Until then it will not happen.
December 29th, 2009 at 12:50 am
There’s lots of “excess” oil currently in the “pipeline”. Once inventory drains down, look out.
American refineries are closing left and right.
Our only hope is continued decreasing American demand. Piece of cake as all those ten-ton pickups wear out. They’re not gone yet. But fading. Still likely for another huge oil bubble. WHen?
December 29th, 2009 at 4:27 am
@ddrich
After reading Barry’s blog my initial thought was ‘funny how people still think of the oil price as something that has anything to do with demand and supply’. However, looking at the comments shows that this is not the case. :)
If my personal theory of the oil price resembles reality ;), the Dubai crisis may have the largest impact on the oil prices next year. Suddenly the oil producing countries might run out of money to finance their oil-price ponzi scheme and we might see prices well below 50$/barrel (inflation adjusted, as I have no clue where the dollar or euro is heading).
December 29th, 2009 at 7:51 am
Take a look at the Baltic dry.
December 29th, 2009 at 7:57 am
Believe that Noam Chomsky covered this, albeit in another context in, “Manufactured Consent”.
ddrich, above, has it precisely right.
December 29th, 2009 at 8:12 am
It’s just a matter of time before cutting ones grass becomes too expensive or illegal due to shortages. We’ve been so wasteful and ignorant for so long and now we’re running on fumes. Humanity is a bad joke and the punchline will kill you.
Better luck next year.
December 29th, 2009 at 8:40 am
DRYS
December 29th, 2009 at 8:57 am
@mathman
Humanity, meaning the world, is really not a bad joke. Europe and a lot of others have been conserving and cutting back on their waste for years. It’s just the egotistical U.S. who believes we are above conserving, because we are the Kings of the World, as we continually display with our Imperialistic Democracy!!!
December 29th, 2009 at 9:29 am
[...] Is the tanker glut telling us oil could fall next year? (Big Picture) [...]
December 29th, 2009 at 10:32 am
[...] Keep An Eye On Freight Rates Posted by Paul Vigna on December 29, 2009 Economy, Markets, Oil For some time now, we’ve been hearing that oil traders are storing crude on tankers idled at sea, betting on higher prices in the future than prices for immediate delivery. Bloomberg puts the pieces together, noting all these tankers stretched end to end would make a line long enough to cross the English Channel (hat tip Big Picture.) [...]
December 29th, 2009 at 11:19 am
Yeah! you can also see how strong the recovery is in imports/exports just looking at the two major ports in the US:
http://www.polb.com/economics/stats/default.asp
http://www.portoflosangeles.org/Stats/stats_2009.htm
If even November 09 is -12% and -20% vs Nov 08… you might want to rethink if people are buyings stuff..
Also, railroads reported loads are flat, way below levels in 2008.
December 29th, 2009 at 3:38 pm
“Traders are storing enough crude at sea to supply the 27- nation European Union for more than three days.”
Three days. Wow. That seems like barely enough to cover blips, actually.